Attracting foreign direct investment is the cornerstone of the planning policy of the country, and the Cayman Islands are renowned for their financial industry and tourism. However, since 2011, FDI flows have been very volatile. Whereas the country is not classified in the 2022 edition, according to the 2021 World Investment Report published by UNCTAD, FDI inflows reached USD 23.6 billion in 2020, down from USD 28.1 billion the previous year, in part due to the crisis triggered by the Covid-19 pandemic. In the same period, outward FDIs totalled USD 10.8 billion. According to the Cayman Islands Monetary Authority, the international investment position shows that the Cayman Islands’ foreign assets exceeded its foreign liabilities by 51.7 billion in 2021 compared to the USD 48 billion recorded in 2020. At the 2021 year-end, the Cayman Islands external financial assets decreased to USD 146.4 billion while its external liabilities were reduced by USD 7.8 million to 947 billion.
The primary sector attracting FDI to the Cayman Islands is the financial services industry, including banking, investment management, and insurance. The country is home to more than 100 banks and over 10,000 investment funds, making it one of the world's leading offshore financial centres. To attract even more FDI, the Cayman Islands are trying to diversify their economy beyond tourism and offshore financial services. This project was partly implemented via the creation of the “Cayman Enterprise City”, which offers new business services in a special economic zone. The Government has introduced incentives to encourage the setting up of local industries: there are no corporate or income taxes for companies on money earned outside the Caymans’ territory, including interest or dividends earned on investments. A solid legal framework, a lucrative banking and financial service industry, access to professional service providers, a stable political and economic climate, the absence of trade controls, modern infrastructure and advanced communications systems are many of the assets that stimulate and attract foreign investors to the Cayman Islands, which is not ranked in the main indexes concerning the business climate. However, the country has faced criticism from some international organizations, particularly regarding its tax policies and lack of transparency (although the EU recently removed the country from its list of non-cooperative jurisdictions).
No income tax is imposed on individuals in the Cayman Islands. |
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Latest Update: September 2023